2022 has been a disaster for new tech IPOs, followed by 2021, where Tech IPOs like Rivian, Intel’s spinoff Mobileye, a restaurant software company, and a Stock-Trading app Robinhood performed well in their debut last year. Intel’s Spinoff Mobileye, a self-driving tech company, is the only tech company that raised $ 1 billion. None of the US tech IPOs have crossed $100 million in 2022.
In the year 2021, at least 10 out of 15 have raised a capital of $1 billion, according to FactSet. The IPO market reduced from $155.8 billion to $8.6 billion, according to Ernst & Young’s report, published in mid-December, was the steepest decline since 2008
David Trainer, CEO of stock research, emphasizes capital allocation, which he says is the leading driving cause of investments.
VC firms in the US raised $131 billion, making it above $80 billion consistent for the second consecutive year. In addition, according to the National Venture Capitalist Association reports, the average Post-money valuation for VC companies rose from $200 million to $360 million.
Take Away:
- Unrealistic capital allocation is the leading cause of IPO market depreciation.
- Needless efforts on human resources further make the IPO market depreciate in 2023.
- Maintaining cash flow is the key for tech IPOs to sustain even if they cannot raise funds through the IPO market. Databricks maintains a healthy cash flow and can survive even if the sky falls, says its CEO, Ghodsi.
- Published By Team Australia News
